Page 105 - RusRPTSept20

favourable for crushers, while next year’s harvest could well be on an impressive level.
Sugar prices in 2Q20 were down 3% y/y, due to oversupply, although the margin in the segment remained decent (12% in 2Q20) as the largest hit was on beet growers. We are waiting for a rebound next season, as the Russian Ministry of Agriculture forecasts a 17% y/y decline in the beet planting area (to 945,000ha) and current weather conditions also suggest that yields will decline. In our view, this will translate into output contracting 30% y/y, to 5.6mnt.
In the meat division, livestock and processed pork prices declined 5- 6% y/y in 2Q20, bringing the segment's margin down 1pp y/y to 21%. The main reason is due to an increase in supply from industrial players. This trend is set to continue throughout the year, leaving limited room for financial to recover in the short term.
In 1H20, OCF was flat y/y, reaching RUB19bn, while capex was reduced 25% y/y to RUB4.8bn The company also undertook notable deleveraging, with net debt declining 16% YTD to RUB51.6bn, while net debt/EBITDA fell to 2.1x, from 3.1x as of YE19.
The BoD recommended interim dividends of $0.19/GDR, for a total amount of $25.6mn (RUB1.9bn), returning a 2% yield and 20% payout. The record date was set as 18 September.
During the conference call, management indicated that capex would be RUB15- 20bn for 2020 (RUB10bn for meat division). Sugar beet production is to become profitable in the next year, according to the company. Almost all farms were completed in the Russian Far East project (expect one) and are to be populated by the end of 2020. The feed mill is due to commence operations this autumn, with slaughterhouse becoming operational next year.
Russian agricultural holding RusAgro has announced the shipment of sows and boars with Dutch genetics to the first breeding farm constructed in the Mikhailovsky Area in the Russian Far East.
The project parameters include the following.
Breeding farm for 3,000 purebred sows and semen production facility. Six pig farms for 54,000 sows each.
Grain storage facility with capacity of 320,000 tonnes.
Compound feed plant with capacity of 240,000 tonnes per year. Waste utilisation plant.
Slaughterhouse and meat processing plant.
The company plans to produce its first commercial pork in the autumn 2021, while in the same year the pig cluster is to employ around 2,000 people.
The company has been working on this project since 2016, and plans an
105 RUSSIA Country Report September 2020 www.intellinews.com